12 April 2021

'Illegal hotel' wins planning approval to change lease purpose

| Ian Bushnell
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Exterior of Knightsbridge apartment complex in Kingston

The Knightsbridge apartment complex in Kingston is now a guest house. Photo: File.

The owner of Kingston’s upmarket Knightsbridge apartment complex, which had been found to be running an illegal hotel, has been successful in changing its use in the lease to a guest house so it does not have to revamp the business.

In a decision thought to have implications for similar businesses, the ACT Civil and Administrative Tribunal (ACAT) ruled that Josip Zivko’s Quanton property group was running a commercial accommodation premises in a residential zone.

Built in 2017, the Leichhardt Street complex offers serviced apartments as well as amenities including a gym and a pool, and advertises on accommodation sites such as Trivago.

The ACT Government granted the owners a Crown lease in March 2015 to use the land for “the purpose of multi-unit housing”, and the block is zoned for high-density residential use, which bans commercial accommodation uses.

Quanton ended up facing ACAT after complaints from the Australian Hotels Association to the government fell on deaf ears.

It is believed an order issued before Christmas gave Quanton until 2 February, 2021, to cease operations, but it lodged a development application seeking to vary the lease purpose clause to add guest house as a use.

A guest house usually includes a shared kitchen and laundry, such as a bed and breakfast, but apparently can be located in an RZ5 High Density Residential Zone such as that of the Kingston address.

The decision means Quanton can maintain the business as it is, but it could open up other planning questions down the track, particularly if similar enterprises follow suit.

This may defeat the intent of ACAT’s decision, which was to close a planning loophole and support orderly development in the Territory.

But the planning authority says the decision does not set a precedence for any future applications in this, or any other, area.

It says the site is directly adjacent to the commercial CZ2 business zone and close by the commercial CZ1 core zone, and that the additional use of guest house to the Crown lease is likely to make a positive contribution to the neighbouring properties.

The lease change also complies with the Territory Plan and relevant planning codes such as the Kingston Precinct Map and Code.

But the decision may not be the end of the matter as there is a separate action before the Supreme Court.

ACAT found that under the Territory Plan, ‘residential’ refers to occupation that must have a degree of permanence, and there was no evidence of this in the Knightsbridge operation.

“The evidence overwhelmingly supports the inference that KFA [Knightsbridge Furnished Apartments] operates some kind of commercial accommodation enterprise, probably in the nature of serviced apartments, upon the land,” it said.

ACAT said Quanton had offered an ‘everybody else is doing it’ defence that only confirmed the need to curtail such enterprises.

The ruling appeared to tidy up an anomaly or ambiguity in the Territory Plan.

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The ‘win’ is to allow the place to operate as a ‘guest house’. I am confused because it is advertising as serviced apartments which are still prohibited on the RZ5 block (high density residential that also preludes commercial activity). This appears to be a case where the crown lease conditions over ride the Territory Plan – they should be consistent.

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